Funny how Minister for Finance Michael Noonan and his Department of Finance resign themselves to being “powerless” onlookers towards the banks in which they have controlling or substantial interests, when challenged by the Opposition, but as revealed in the Irish Sunday press today, they are portrayed as assuming the role of power-broker when contacted by billionaires.
Both the Sunday Times, which is embroiled in an injunction row at present with developer and businessman Paddy McKillen, and the Sunday Independent today report on contact between representatives of the billionaire Barclay twins and the Department of Finance. The Barclay twins are vigorously pursuing control of the three Maybourne hotels in central London, Claridge’s, the Berkeley and the Connaught; Paddy McKillen owns 36% of the company controlling the hotels, the Barclays own 28% and there is a tussle before the British appeal court at present about control of Derek Quinlan’s 36%.
Central to today’s storm-in-a-teacup/controversy are emails in October 2011 when the Barclays were intensively pursuing the stakes of both the Green family and Derek Quinlan. The Barclays were also sniffing around Paddy McKillen’s loans at Anglo, or Irish Bank Resolution Corporation. John Moran – who is now the Secretary General at the Department of Finance, but was in late 2011 Head of Banking at the Department reporting directly to its then Secretary General, Kevin Cardiff – is cast as facilitating the Barclays by telling their representative Richard Faber in an email that if he was “not making the right progress for whatever reason with the IBRC” then senior Department of Finance mandarins “remain at your disposal (as of course do I if you are unable to reach them)”
Paddy has gotten hold of Department of Finance emails under Freedom of Information requests and is predictably unhappy, though there is something of the pot and kettle here, with Paddy having previously written to An Taoiseach and others in government in May 2011, making representations to stop his loans being acquired by NAMA. Minister Noonan said his office passed those representations on to NAMA, which subsequently decided not to acquire Paddy’s loans. So here you have Paddy in May 2011 making his own representations to government, but when the Barclays do something similar six months later, Paddy starts whinging.
Paddy’s spokeswoman is quoted as saying “Mr McKillen is demanding a full explanation from the Department of Finance regarding what appear to be informal, supportive communications between the department” and the Barclays. Paddy is reportedly unhappy with the Department staff and is making noises about breaches of the Ethics in Public Office legislation.
There is a claim reported arising from “sources” that if IBRC had sold Paddy’s loans to the Barclays then the Irish taxpayer would have faced multi €100m losses. I would take that claim with a giant pinch of salt, and indeed it remains curiously unclear why IBRC didn’t progress talks with the Barclays on Paddy’s loans – which are a gateway to control over Paddy’s shares in the hotels – because ultimately, IBRC could have made the sale of any of Paddy’s loans conditional on the buyer buying ALL of Paddy’s loans at par value. The tax payer could have been in clover if a deal had been done on the right loans at the right price.
For once, there is sympathy on here for John Moran. He is being hounded by the Sindo at home and on his mobile for comment – don’t be surprised John, if the Sindo feature your family life next week. After all, John received communication from a serious buyer wanting to buy Irish state assets – loans at IBRC which was 100% owned by the Government are “state assets” – and he seems to have responded in a helpful and facilitating manner, though there is nothing in the emails which suggest shenanigans. What was he supposed to have written? There is actually some relief on here that John recognized the Barclays were serious buyers, and that he did promptly pass on messages to IBRC, and he treated the Barclays with courtesy.
By the way, just around now, Paddy McKillen should be in intensive talks with the special liquidator at IBRC about refinancing his estimated €300m personal and €550m corporate loans, which will otherwise be offered for sale and the Barclay brothers have let it be known that they may be prepared to offer a premium for those loans above their market value. Paddy made the Freedom of Information request on 8th March 2013, a month after the announcement of the IBRC liquidation and when it became clear that loans would be offered for refinancing before being offered for sale on the open market. So, here you have the Department of Finance coming under pressure from Paddy with threats of referrals under the Ethics in Public Office legislation at the same time as IBRC is considering refinancing proposals. Normally liquidators are independent and protect the rights of all creditors, but the IBRC liquidation is “special” and Minister Noonan and the Department of Finance control the liquidation through the IBRC liquidation Act. All a coincidence, no doubt.